Why President Trump's FY2020 Budget Fails to Live Up to Its Vision for a Better America
(Photo credit: Michael Vadon)
Titled A Budget for a Better America, President Trump’s third budget lays out his vision for the government’s funding and policy priorities between for fiscal year (FY) 2020—from October 1, 2019 and September 30, 2020. While there are some priorities in the president’s latest budget worthy of further consideration—such as the renewed call for improving oversight of paid tax preparers—most of his proposal would propel us in the opposite direction of “a better America”. In fact, by pursuing measures under the guise of achieving budgetary “savings” and strengthening “program integrity”, the president is pushing for a nation that is intentionally and alarmingly dismissive of the economic needs of so many of our families, friends and neighbors.
Denying Families Access to Critically Important Tax Credits
The budget proposal makes clear its intentions to deny working families access to critically important tax credits, such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), among others. For example, over the course of the next decade, the president’s budget calls for “program integrity” measures that would ultimately deprive working families of over $67 billion in tax credits that safeguard against poverty and offset some of the cost of raising children. Among these measures would be a new requirement for low-wage workers to provide a social security number (SSN) to claim the newly created, non-refundable Credit for Other Dependents—which was established in response to the Tax Cuts and Jobs Act (TCJA) policy of denying low-income children without an SSN access to the CTC. (Prior to the TCJA, a low-income child with an Individual Taxpayer Identification Number (ITIN) could have qualified for the CTC).
The president’s budget also calls for the permanent extension of the individual provisions—such as new tax rates, the doubling of the standard deduction and elimination of the personal exemption, among other changes—that make up part of the TCJA and are set to expire in 2026. By taking this action, the president will make the TCJA in its entirety permanent. As we and our partners at the Institute on Taxation & Economic (ITEP) have shown recently, the TCJA overwhelmingly benefits White households, especially those at the top, at the expense of households of color. By seeking to make the individual provisions permanent, the president is in effect calling for continued investments in America’s gaping racial wealth divide.
When it comes to the Volunteer Income Tax Assistance (VITA) program—a program from the IRS to ensure low- to moderate-income families have equitable and free access to the tax code and its many benefits—yesterday’s budget release did not address the program. However, as we await the release of further budget details, we are hopeful that the president will follow the lead of Congress, which recently increased funding for this important program by 20 percent on a bipartisan basis.
Leaving Consumers Vulnerable to Predatory Financial Actors, Products and Services
The Consumer Financial Protection Bureau (CFPB) makes only one, brief appearance within the new budget: a call to “restructure” the agency. This likely means that the president will restrict the CFPB’s functions (including its consumer complaint database) and weaken its role as a politically independent consumer watchdog. Based on last year’s budget, we imagine that the president will soon ask for Congress to have greater oversight of the CFPB, which would unnecessarily hamper the agency’s mission of protecting consumers against abusive, deceptive and predatory practices.
Before President Trump appointed two of his own directors, the independent CFPB has written several strong rules—such as its 2017 payday lending regulations—to protect consumers against abusive practices, taken legal action against financial providers, handled over a million complaints and returned nearly $12 billion back to 30 million harmed consumers.
Disinvesting in Housing and Community Development
The president’s budget proposes a sweeping 16.4 percent cut to the U.S. Department of Housing and Urban Development (HUD), eliminating the Community Development Block Grant (CDBG) program, the Home Investment Partnership Program and the Choice Neighborhoods program. The president also calls for eliminating the U.S. Department of Agriculture’s (USDA) 502 Single Family Housing Direct and 504 Home Repair programs, which respectively provide affordable loans to low-income families for home purchase in rural areas, as well as loans to these households to repair and modernize their homes. Overall, the president’s budget calls for a 15 percent cut to the USDA’s budget in FY2020.
Turning his attention to community development programs, the President calls for the elimination of the Community Development Financial Institutions (CDFI) Fund at the U.S. Treasury Department. Since 1994, the CDFI Fund has financed mission-driven financial institutions to invest in communities that have either not been served by mainstream financial institutions or would otherwise go unserved if not for the CDFI program. The budget also calls for eliminating USDA’s Rural Economic Development program, achieving $10 billion in cuts over the next ten years.
On a more positive note, the budget calls for an increase of up to $3 billion in funding for the USDA’s Community Facilities Relending Program, which makes direct and guaranteed loans to community lenders so that they can re-lend the money to finance community facility projects in rural areas, such as hospitals, schools and child care centers. It also calls to level fund ($75 million) HUD’s Family Self-Sufficiency program, a powerful way for families in public housing to achieve economic mobility.
Attacking the Safety Net
Among the most alarming proposals within the new budget are calls to expand work requirements and repeal the Affordable Care Act (ACA). These actions would strip access to critical food, housing and health supports that help families make ends meet and prevent them from falling into poverty. Over the next 10 years, the president’s push for expanded work requirements would lead to a $220 billion cut to the Supplemental Nutrition Assistance Program (SNAP); the loss of medical coverage for many through Medicaid; and increases in the rent of those receiving public housing assistance.
The budget also calls for a $15 billion cut to Temporary Assistance for Needy Families (TANF) over the next 10 years, as well as the elimination of the Community Services Block Grant program (which helps families through anti-poverty programs like housing, employment and nutrition assistance) and the Low-Income Housing Energy Assistance program, which helps provide utility assistance to low- and moderate-income families throughout the country.
Over the Next Few Months, Congress Will Decide if it Wants to Follow or Ignore the President’s Budget. This Is Where You Come In.
As bad as the President’s FY2020 budget is, right now it’s the equivalent of a wish list. Over the next few weeks and months, members of Congress on the House and Senate Appropriations Committees will begin deciding how to allocate public dollars. While many of these legislators will certainty look to the President’s budget for guidance, it’s ultimately up to this group—as well as the rest of Congress—to decide what gets funded.
If we’re to ensure that the low- and moderate-income communities we serve and care about have the resources they need to achieve long-term economic security and prosperity, then we’re going to need the voices and perspectives of partners like you in this fight. Your voice lifts up support for critically important programs and makes it harder for member of Congress to cut programs during future negotiations over limited federal resources.
With this in mind, make sure you have state and local data, as well as personal stories, that will help you advocate for the programs you care about most, including any that may be under threat in the president’s FY2020 budget. Armed with that information, call your members of Congress and tell them to oppose the president’s harmful FY2020 budget.
Sign up for our Advocacy Center for easy-to-use resources (including call scripts and email templates) to make the case to your federal legislator on funding and programmatic issues as quickly and effectively as possible.